SAJC 2023 JC2 H2 Standard of Living & Macroeconomic Indicators Lecture Notes

Standard of Living SAJC/2023/JC2/H2 1 ST ANDREW’S JUNIOR COLLEGE JC2 H2 ECONOMICS 2023 1 INTRODUCTION TO MACROECONOMICS 3 1.1 Macroeconomics vs Microeconomics 3 1.2 Economic Goals 4 1.3 Standard of Living and Macroeconomic Goals 5 1.4 The Circular Flow of Income 8 2 KEY MACROECONOMIC INDICATORS 15 2.1 Key Macroeconomic Indicators and Macroeconomic Aims 15 3 INDICATOR OF ECONOMIC GROWTH 17 3.1 National Income Statistics 17 3.2 Uses of National Income Statistics 22 3.3 Limitations of GDP Statistics as an Indicator of Economic Welfare 23 3.4 3.5 Alternative Measures of Welfare / Standard of Living Summary 32 34 4 INDICATOR OF PRICE STABILITY 35 4.1 Inflation Rate 35 4.2 The Consumer Price Index (CPI) 37 5 INDICATOR OF UNEMPLOYMENT 40 5.1 Unemployment Rate 40 Standard of Living and Macroeconomic Indicators Theme 3 provides students with an overview of the workings and linkages of the national and international economy. Students will use the concepts, theories and principles from Themes 1 and 2 to examine the problem of scarcity of resources and the concept of tradeoffs at the national level. In particular, students will examine how governments make policy choices at the national level to improve living standards. In doing so, students will discuss how governments consider competing needs, weigh costs and bene fits, recognise tradeoffs and consequences to make policy decisions. Students will first gain an understanding of the circular flow of income model and concepts of AD -AS, before applying the concepts to analyse macroeconomic issues and government decisions at the national level. Students will also examine domestic and external factors that influence economic growth, price stability, employment and balance of trade, with a focus on how these factors affect a country’s standard of living. Additionally, students will also discuss the different policy choices available to governments and their effectiveness in achieving higher living standards.

Standard of Living SAJC/2023/JC2/H2 2 6 BALANCE OF TRADE 42 6.1 Inflows and Outflows 42 6.2 Structure of Balance of Trade 42 6.3 Balance of Trade as a Key Indicator 43 7 8 CONCLUSION APPENDICES Appendix A Appendix B Appendix C Appendix D 44 46 46 48 51 53 Reading List and Reference • Economics, John Sloman, 8th ed., pp 403-414, 426-432, 433-438, 446-4484, 457-461 • Essentials o